The National Board of Revenue is going to incorporate a provision in the proposed Direct Tax Act Code-2012 for preventing tax evasion through misuse of transfer pricing by the multinational companies (MNC), NBR chairman Nasiruddin Ahmed said on Sunday.
‘The revenue board has already formed a unit to work on the rules and scan how MNCs misuse  transfer pricing to evade tax,’ he said at a consultation meeting with stakeholders on the issue at a city hotel in Dhaka.
There is an allegation that Bangladesh is losing huge amount of revenue every year due to misuse of transfer pricing, he said.
The NBR organised the consultation to gather feedback from experts, economists and other stakeholders on the proposed transfer pricing rules.
Existing income tax ordinance of 1984 does not have any clear direction to check tax evasion through transfer pricing, officials said.
Transfer pricing occurs when a company transfers tangible or intangible output to another company which is a subsidiary of the former or in which it has substantial interest of any form.
The prices that are placed on such transfer of goods or services are called transfer prices. 
Depending on the tax structure of the country in which an individual business subsidiary or related business unit operates, the transfer prices are set at high or low to evade tax, experts say. 
NBR officials said that multinational companies evade tax through the abuse of transfer pricing or mispricing in four ways, which include capital flight, under-invoicing, transfer of dividend and profit shifting to permanent establishments or parent companies.
So NBR is going to include a provision in the proposed law to check such manipulation, they said.
At the consultation meeting, International Finance Corporation’s transfer pricing consultant Arcotia Hatsidimitris advised the NBR to adopt transfer pricing for balance protecting of tax base and attracting foreign direct investment.
He also stressed the needs on enacting robust legislative and administrative frameworks, adopting e-filling of tax return, increase internal capacity, implement documentation requirements and undertake audits to check transfer mispricing.
‘Transfer pricing tax policy should aim at securing the tax base, attract FDI, avoid double taxation through ensuring efficient implementation and effective enforcement of the legislation,’ he said in his keynote paper.
Transfer pricing is not illegal but manipulation of the system is illegal.
So NBR should adopt a policy to prevent manipulation of transfer pricing, he said.
NBR members Syed Aminul Karim, Quader Sarker, Nasir Uddin, Policy Research Initiative executive director Ahsan H. Mansur, among others, were present at the meeting.